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Direct Materials Variances Bellingham Company produces a product that requires eight standard pounds per unit. The...

Direct Materials Variances

Bellingham Company produces a product that requires eight standard pounds per unit. The standard price is $6.5 per pound. If 5,800 units used 48,300 pounds, which were purchased at $6.37 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct materials price variance $
b. Direct materials quantity variance $
c. Direct materials cost variance $

Solutions

Expert Solution

a. -$6,279

Direct material price per variance = Actual Quantity ( Standard price - Actual price)
                                                        = 48,300 ($6.5 -$6.37)
                                                        = -$6,279

b. 12,350

Direct material quantity variance = standard price ( standard quantity - Actual quantity)
                                                                    = $6.5    ( 46,400 - 48,300)
                                                                    = $12,350

c. $6,071

Direct material cost variance = (standard quantity * standard price) - (actual quantity * actual price)
                                                            = (46,400 * $6.5 )      - (48,300 *6.37)
                                                            = $6,071
Standard quantity to produce Actual output = 5,800 * 8 = 46,400 pounds

ekkarill92 answered 1 year ago
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